Main menu

Post navigation

Corporatism is not free-market capitalism

I am going to start this post by linking an article by Ralph Nader, the left-wing Green party hero. I, a libertarian, unapologetic capitalist, agree with Mr. Nader on this issue. Nader’s take is that the left and the right should be able to agree that corporatism is a common enemy.

The common response that I always hear from people on the left to my promotion of capitalism is: why is government bailing out big business? Why is government paying off big agriculture with billions in subsidies? Why are corporate titans getting government money? Why is the government in bed with the defense industry?

The left is completely correct on all of these points. My response is that true capitalists want government to leave business alone as much as possible. In the sense that government promotes certain businesses over others (which is what corporatism is), it is violating a central principle of free-market capitalism: companies should live or die based on the marketplace and their ability to create new and better products at a lower cost, not on getting handouts from government (which means taking taxpayer money to make the rich even richer).

Let me make this very clear: true capitalists hate corporate welfare just as much as the left does, and perhaps even more because it makes business look like the enemy. In addition, in a corporatist world, your success depends more on your connections and who you pay off (or lobby), rather than the brilliance of your product. Nothing could be more offensive to a true capitalist.

Before we go on, let me address something that many people are thinking right now, which is: “well, Republicans are just as guilty of promoting corporate welfare as anybody else.” This statement is correct. All of us will soon see the disgusting ritual of most Republicans and most Democrats traveling to Iowa to assure agriculture subsidies continue to enrich a few well-placed farmers. So, you and I are paying taxes so that a small group of rich, well-connected people in Iowa can get richer. It’s an abomination.

The left and the right should unite to force our candidates to have the guts to insist that agriculture subsidies get cut or completely eliminated. Ethanol has been a disaster, something on which even most environmentalists agree (more greenhouse gases get spent creating ethanol than get saved by using it rather than oil-based gasoline).

In addition, we should be able to agree on no more bailouts for businesses that are about to fail. The TARP process lacked a minimal amount of oversight and control. I guarantee in the years ahead we will learn about banking executives who skimmed government money.

Pres. Eisenhower’s warning about the military-industrial complex is coming true before our eyes. Powerful corporate interests have a tremendous amount to gain by pushing their wares to continue our current war strategy. They continue to lobby and provide campaign contributions to those congressmen friendly to the defense industry, and oppose anybody speaking out for change. Let’s agree on slashing the defense budget and working to change foreign policy by getting out of Afghanistan and Iraq immediately. While we’re at it, let’s bring the troops home from Germany, Kosovo and Japan and work with China to negotiate a settlement for North Korea. One of the reasons China supports North Korea is to maintain a buffer between U.S. troops and the mainland — if we agreed to withdraw our bases from Asia, our relations with China would improve. And we’d save a lot of money.

The utopian vision of most Mormon libertarians and communitarians is strikingly similar in its ultimate result: communities of people voluntarily uniting to help each other and build zion. The big difference, it appears to me, is that libertarians like myself want this to take place voluntarily, without force and without government involvement. Libertarians believe that more government will take us farther away from this communitarian ideal. But if we agree on the ultimate goal, why is there so much angst and anger about our prescription for getting there?

Even the most strident communitarian should be able to see the beauty of people using their creative skills to bring forth new products that really change peoples’ lives in positive ways. When I think of capitalism, I think about the internet, which is now a new tool for missionary work, or the Ipad, which many of our smartest entrepeneurs are calling the most transformative technology in decades or perhaps ever. If the people creating these things are stimulated by money for now, I say, who cares? This seems to be the motivation we need in a pre-zion world. I long for the world when people will work for the greater good of mankind, but that time is not today. Today, people need money as a motivation. And by the way, you still need money to pay your bills. Sorry, it’s just the reality of the world we live in.

Share this:

Like this:

About Geoff B.

Geoff B has had three main careers. Some of them have overlapped. After attending Stanford University (class of 1985), he worked in journalism for several years until about 1992, when he took up his second career in telecommunications sales. In 1995, he took up his favorite and third career as father. Soon thereafter, Heavenly Father hit him over the head with a two-by-four (wielded by the Holy Ghost) and he woke up from a long sleep. Since then, he's been learning a lot about the Gospel. He still has a lot to learn.
Geoff's held several Church callings: young men's president, high priest group leader, member of the bishopric, stake director of public affairs, media specialist for church public affairs, high councilman. He tries his best in his callings but usually falls short.
Geoff has five children and lives in Colorado.

58 thoughts on “Corporatism is not free-market capitalism”

JrL, those are two good areas to explore. I cannot speak for all libertarians, but I would say that most of the anti-trust activity we see lately against Microsoft and Google is a huge waste of time. By the time those battles are fought, the marketplace will have destroyed the supposed monopolies under consideration. Facebook is scaring the wits out of Google, and a resurgent Apple is keeping Microsoft execs up at night. In a dynamic marketplace, antitrust issues really seem old-fashioned. Having said that, I think many libertarians agree that there have been times when “breaking up the trusts” was necessary. Here is a paper on this issue you may find interesting:

As for consumer protection, my personal opinion is that the marketplace can work out most problems if there is a strong court system and strong protection of property rights. If somebody deliberately defrauds you or harms you, you should be able to take him or her or the company to court and get damages. In this time of instant information, there should be on-line rating systems (Consumer Reports, for example) were consumers should go to before buying products. If your product is bad, the marketplace will find out. I would argue that to a certain extent the expectation that the “government will protect you” often does more harm than good because people avoid doing their own due diligrence because they believe somebody else is looking out for them.

The whole issue of consumer protections is really, really complex and contentious, and I really hope this conversation doesn’t get on a tangent with everybody arguing about how great the FDA is. But it probably will. Sigh. Concentrate on cutting corporate welfare, people!

Corporatism seems more akin to tyranny. However, what are your thoughts about Net Neutrality since you mentioned:

When I think of capitalism, I think about the internet, which is now a new tool for missionary work, or the Ipad, which many of our smartest entrepeneurs are calling the most transformative technology in decades or perhaps ever. If the people creating these things are stimulated by money for now, I say, who cares?

Although Zion is a worthy goal, and since the Book of Mormon is a type of the Second Coming, it is rather distressing to think that the Zion-like community of 4th Nephi followed the events that led up to the destruction of the “free government”.

Geoff,
In spite of having read the other post, I still think that your stance against Net Neutrality runs counter to your stated goals in this post. Comcast is completely capable of engaging in dirty tricks in it wants to slow up CBS’s or ABC’s streaming content. Government intervention wasn’t necessary for that.

That said, I’m all for attacking the notion of the corporation. Whenever a business’s interests lie first with its stockholders, rather than with its customers, bad stuff is sure to follow. Of course, Milton Friedman disagrees with us both there, na ja.

Certainly, almost all government regulation has come in the aftermath of some large business interest behaving badly (not all corporations, of course, but all roughly equivalent in power). And certainly businesses have done their best to turn laws designed to enforce fair play to their advantage. I’m still not a big believer in the invisible hand, though, so I’ll always likely fall on the side of some government regulation.

Geoff, I agree with most of this from a left-of-center perspective. But, how does governmental non-interference work when the free market is open across our borders? I’m thinking specifically of China’s cornering of the rare earth metals market since U.S. subsidies ended in the 1980’s, and our need to maintain defense capabilities and food security. So would national security grounds, for instance, be sufficient to allow some corporatism?

I’m with you on being against corporate welfare – but it’s politically difficult thing to overcome. Corporations have a lot of money & power and a vested interest to influence politics in their direction. The latest Supreme Court ruling where corporations were ruled to have the same rights to free speech as an individual makes this an even harder problem to overcome.

The farm subsidies in Iowa is an interesting example. Iowa farmers have a particular political influence because the presidential primaries start there and winning Iowa sets the tone for the rest of the election.

So, I think my biggest problem with libertarianism is that in practice, those most vulnerable with the least amount of political influence (the poor and uneducated) get hit the hardest by libertarian inspired rhetoric – vouchers! cut school funding! – which tends to drain finances from public schools in poor areas. Or let’s cut medicaid! Something happening in Arizona right now.

Or worse, government will never just let our massive banks fail because that will have serious impacts on the markets, but they will never properly regulate or break up these gigantic banks because of these same libertarian arguments.

So, I’m with you, but the rich and the well-connected, in the real world, tend to overcome ideology to gain all kinds of influence, but then use that ideology, including libertarian ideology, to maintain their advantage.

DCL, you raise an interesting point with your rare earth metals example. I guess I would question the prevailing view that China is some kind of horrible threat. Put yourself in China’s position: the U.S. has held two wars on its borders in the last 60 years and continues to support a Chinese province in rebellion (again, from China’s perspective, I understand the Taiwanese don’t see it this way). China has huge, and I mean huge, demographic problems. Chinese leaders are always on tenterhooks regarding internal dissent and rebellion. China is not historically expansionistic beyond its zone of influence (the Chinese never invaded the U.S, but the U.S. has meddled in China for decades). So, from the Chinese perspective, which one is the expansionistic power and which one is the poor country that is mostly on the defensive?

I know this does not directly answer your question. A true libertarian government would defend our country against aggressive powers intent on destroying the United States. Does this mean we should be doing more to protect rare metals? I don’t know. But I do think many people are overreacting to China as a threat.

Geoff, I fully see your point on China and didn’t mean to simply raise it as a threat, but the larger question is how is our government supposed to support a completely free market domestically when other countries use some combination of mercantilism / corporatism to manipulate the markets for their own political goals? An example with China is how it suspended rare earth metal shipments to Japan during the recent dust up over territorial waters. The WTO is supposed to mitigate these problems, but doesn’t work very well at all.

DCL, excellent point. Let me think about it a bit. I don’t pretend to have all the answers. And many people who comment here would say I have very few good ones. Meanwhile, let’s see if anybody else has some thoughts.

John C, #7, this post is not really about net neutrality, but this issue is actually something I know a fair amount about.

So, let’s say Comcast slows down network TV streaming (which has not happened, but let’s say it does). My first question is: how exactly would Comcast do that? Right now, Comcast is peered directly to these providers or gets them through a CDN. Are you saying Comcast would de-peer from them or from the CDN? Or are you saying that Comcast would block their IP addresses? If you know how IP works, you know that any of these measures is very easy to get around. Or are you saying that Comcast would set up a firewall completely blocking all content from these providers (which is what Communist countries do to block content). Now keep in mind that there are all kinds of other sources of TV content, there are a variety of web TV companies and Hulu, etc. Are you saying that in addition to setting up a firewall to block these networks, Comcast would take the additional step of blocking ALL of the web TV providers?

If Comcast took some of the first steps, users could get around them (if you de-peer from CBS directly, the packets just go to Comcast’s routers by a slightly longer path, less than a msec delay, not even noticeable). Comcast would never de-peer from a CDN because they lose all of the other content, including stuff they want. They would never block an IP address because the provider would just change IP addresses, which is really easy to do, and content could just go through a third party provider. So, the only way that Comcast could really *block* rival network traffic would be firewalls aimed at such content. This would be totally unprecedented, a declaration of war that would never be accepted by the greater internet community. Comcast would lose hundreds of content providers and millions of subscribers would drop them. Comcast would go out of business.

The scary scenario you are describing is just not realistic technically.

Now add to that the fact that there are 4g networks offering alternate broadband access popping up like mushrooms. Customers who want the content Comcast would theoretically block would just drop Comcast and go to somebody else.

Sorry, John C, the scary scenario you are describing would never happen. The market would take care of the problem. This is the great thing about the internet.

I’m with you on being against corporate welfare – but it’s politically difficult thing to overcome. Corporations have a lot of money & power and a vested interest to influence politics in their direction. The latest Supreme Court ruling where corporations were ruled to have the same rights to free speech as an individual makes this an even harder problem to overcome.

I strongly disagree with this POV. Corporations (or unions, or non-profits, or whatever) are simply collections of individuals speaking with a single voice. The New York Times is a corporation — should we prevent it from publishing opinions and supporting candidates and ballot initiatives? Certainly not. Should we prevent the Corporation of the President of the Church of Jesus Christ of Latter-day Saints from supporting or opposing political issues? Should we prevent Whole Foods Market from speaking out against agricultural laws that will make their business more expensive? I would answer no to all these questions.

The problem is not corporate money. The problem is politicians who have too much power. If we were to restrain the power of government and return the federal government to its constitutional limits, then corporate money couldn’t buy legislation.

I’m actually not making a specific commentary about whether the Supreme Court ruling was the right one at all. I’m merely stating that it makes the problem more difficult.

For some corporations, there’s a lot of money behind that collection of people and with that money they can influence legislation, buy airtime and influence elections.

If we shrink the government, just how do we do that? Especially in the face of powerful entities that are potentially hurt when we shrink the government? So, this just brings me back to my original point.

Again, its why when we do successfully scale back government (say welfare reform in the 1990’s) it’s usually on the backs of the poor.

It’s why in Arizona right now (where I reside), the recent budget is going to slash funding on education and medicaid. The rich are largely unaffected by these kinds of cuts – they have more than enough money to fund their health care and their children’s education out of pocket. Or they live in an affluent neighborhood where there’s plenty of available money for this.

No talk, that I am aware about anyway, in closing loopholes and streamlining the tax code so that those with political connections and high-priced lawyers have fewer avenues to hide income from the IRS.

“The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation. These views dovetail with the brothers’ corporate interests. In a study released this spring, the University of Massachusetts at Amherst’s Political Economy Research Institute named Koch Industries one of the top ten air polluters in the United States. And Greenpeace issued a report identifying the company as a ‘kingpin of climate science denial.'”

The Koch brother (billionares) are actually supporting (heavily) the Tea Party movement.

I’m not saying the Tea Party movement supports Corporate Welfare, I’m saying that major corporations will push the Tea Party and libertarian ideology to make sure only programs that benefit the poor are cut.

Thanks for the response. I actually have nothing to say about it. Its impossible for me to know whether the New Yorker piece was unfair or not. I think it makes some interesting points though and it would be wrong to dismiss it out of hand just because the Koch’s say so.

Either way, my original point still stands. If the Koch’s and other libertarians truly are against corporate welfare I would love to see it in action in a strong way. I would love to see them and others support rolling back subsidies and tax breaks that benefit them specifically. I would love to see them support such action vigorously and with cash.

I just have not seen any strong initiative in this direction politically and in fact any time any action is proposed to address this, it’s fought tooth and nail by those affected and the Republicans (and too often Democrats) join those businesses in their opposition. Libertarians, I might add, have often been far too silent in this regard.

There seems to be a bi-partisan support right now to simplify the tax code, this will be the real test if we’re really serious about ending or at least lowering corporate welfare.

Well, I don’t know what libertarian publications you read, but the ones I follow — the Cato Institute and Reason magazine, chiefly — both frequently call for ending corporate subsidies, including agriculture (like Geoff’s example of ethanol) and protectionism.

As far as I’m concerned, there’s no discernable difference between Democrats and Republicans when it comes to spending; it’s just what programs they choose to throw the money at. I’m heartened by recent Republican calls for real spending cuts, but I have yet to see how much and what programs. Time will tell.

Sorry, one more related point to my last because I think this idea I’m trying to push that in theory we are against corporate welfare but in practice we’re just going to limit government when it benefits poor people. I know it sounds incredibly cynical, but the evidence is pretty overwhelming.

by the economist, Simon Johnson, who wrote this article worth a read called “Did the Poor Cause the Crisis” that addresses and debunks the narrative that Fannie and Freddie’s efforts to expand homeownership to the poor is the reason the housing bubble happened.

One quote:

“The evidence on this point is not as definitive as one might like, but what we have – for example, from the work of Princeton University’s Larry Bartels – suggests that over the past 50 years, virtually the entire US political elite has stopped sharing the preferences of low- or middle-income voters. The views of office holders have moved much closer to those commonly found atop the income distribution.”

and this one as well:

“There are various theories regarding why this shift occurred. In our book 13 Bankers, James Kwak and I emphasized a combination of the rising role of campaign contributions, the revolving door between Wall Street and Washington, and, most of all, an ideological shift towards the view that finance is good, more finance is better, and unfettered finance is best. There is a clear corollary: the voices and interests of relatively poor people count for little in American politics.”

So, if libertarians just held their noses for a bit, and focused 100% of their efforts in common cause with liberals to find ways to offset this shift, the world would be a much better place.

But for some reason, it has just been much more satisfying to blame the poor whenever something bad happens in America (or the government trying to help the poor).

Mike, that’s true, except the Republican side of the libertarian argument (end government support that helps the poor) has gotten a lot of powerful support in Washington and I can point to actual legislation influenced by that ideology.

I know it probably hasn’t been pushed as far as libertarians want, but I really think its time for libertarians to end their long alliance with Republicans (the Tea Party movement was largely a Republican movement) and shift their focus toward finding common cause with liberals because these are the most pressing problems facing our nation today – never-ending wars in foreign countries, and major amounts of corporate favoritism.

So, if this post is a shift and we start seeing a consistent and constant effort from the libertarians to forge alliances with liberals, I think that would be a huge benefit.

So far, this hasn’t happened, sadly – maybe the economic crisis derailed it. Maybe the next two years is an opportunity. But I would love to see more libertarians support Democratic policies and priorities and find ways to influence them rather than outright oppose them.

I would define “corporatism” as the advocacy of special treatment for organized groups of individuals. There are numerous examples of corporate welfare that are positively disgraceful.

But “corporatism” extends beyond favors for politically connected businesses to special favors for many other organized groups. There is no better example of corporatism in the world today than contemporary labor unions, and in particular those with collective (read: corporate) bargaining rights.

A private sector labor union has more privileges with respect to an employer than the employer has with respect to the union. A gunshot marriage more or less, a government enforced monopoly on the provision of labor to a private organization. So which is the better example of corporate welfare, the union or the corporation its members work for?

Public sector unions are worse, especially those with collective bargaining privileges, a combination that no less a figure than FDR warned strongly against:

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. (FDR, Letter on the Resolution of Federation of Federal Employees Against Strikes in Federal Service, August 16, 1937

If we are going to have a welfare state, it should be welfare for all, not welfare for insiders, the well off, and the well connected.

Scott, until liberals understand that liberty is more important than forced equality, it’s impossible to imagine an alliance of libertarians and liberals on economic issues. There are core issues there that are simply impossible to reconcile. However, as I say in this post, there are many areas on which we can agree: let’s agree on the antiwar movement and ending corporate welfare in all its forms.

Geoff,
Your argument here and your argument there both rely on the same rosy view of technology and humanity. If technology to avoid dirty tricks will improve, won’t technology to pursue it also? We’re not talking about blocking sites, we’re talking about making certain sites slower by directing their traffic to more crowded band-widths. That is possible (in fact, wireless companies are insisting (and have insisted) that it is necessary). Most people won’t worry about a work-around, they’ll look for a provider who isn’t so slow (actually, that probably too optimistic; most people will just whine about it). You are too optimistic, I think.

Which takes me to my second point, “until liberals understand that liberty is more important than forced equality.” There are plenty of liberals who do understand this (myself included). It would help the conversation along nicely if you didn’t treat us all like brainwashed pinkos. Especially, when you continually project an overly rosy view of our new corporate overlords (even when rejecting those overlords).

“John C, given the nature of IP and the multiple routing technologies in the internet, how exactly would Comcast go about slowing down access to content?”

it interesting that so much of this discussion centers on ISP’s. Comcast can slow access simply because it controls the entry point between the internet and the user — the point at which regardless of how the Internet works, there is no alternative path. And the ability to secure an alternative is very limited. In most (perhaps all?) instance, Comcast has a monopoly on cable internet access. There is (usually) just one affordable competitor: the telephone company. So home internet access may not be subject to a monopoly, but close.

Wouldn’t a true libertarian approach require completely open access? That is, wouldn’t libertarians reject the grant of exclusive franchises, whether by calbe operators or telephone companies? Of course, the competing companies must somehow cross private property to get to my house. And wouldn’t a strict libertarian pholisophy bar eminent domain or other publically-mandated uses of property? Thus allowing my neighbor(s) to dictate what ISP’s I could use?

Centering a “corporatism” discussion in the context of what is and likely must be a regulated industry makes little sense to me.

Union power is largely on the decline. Yes liberals support them, but the general public hardly does so I have a hard time believing that belief in unions will be a show stopper preventing any kind of alliances between the two. Certainly, conservative ideology is much more pernicious, pervasive, and powerful in our central government that should be much more offensive to libertarian sensibilities than unions.

Mike,

I want to lift one quote from your linked article that I think points to the problem here:

“By the time Schweitzer sidled up to the convention podium, any libertarian notion beyond refusing to torture U.S. citizens was going to be about as welcome as a nude calendar of Karl Rove. ‘Four billion in tax breaks for big oil?’ he howled. ‘That’s a lot of change, but it’s not the change we need!’ The crowd roared.”

Isn’t that exactly what we’re talking about here? Narrowly applied tax breaks to one particular kind of industry, but it’s used here as an example why liberals and libertarians could never mesh.

I think the bigger problem is that the Republican party has done a better job and meshing its rhetoric to appeal to libertarians even when their ideology and their actions are opposed to it. Further, the right has so effectively demonized the right, they make it seem like these alliances are impossible – which only further helps their cause.

I think Matthew Yglesias, one of the leading liberal bloggers out there, is someone worth following for a while. You’ll see lots of ways liberals and libertarians could form alliances reading his rhetoric. Here’s a few:

“I think it’s pretty clear that, as a historical matter of fact, the main thing ‘the state’ has been used to do is to help the wealthy and powerful further enrich and entrench themselves. Think Pharaoh and his pyramids. Or more generally the fancy houses of European nobility, the plantations of Old South slaveowners, or Imelda Marcos’ shoes. The ‘left-wing’ position is to be against this stuff—to be on the side of the people and against the forces of privilege. ”

Great post! I am writing you from Paraguay where capitalism unfortunely is under attack (Mr Chavez & Company). I have a simple question: How would you define libertarians, any relation with liberalism.

Enrique, I have spent a fair amount of time in Paraguay, both in Asuncion and Ciudad del Este. Me encanta.

Corporatism is what you had in Paraguay under Stroessner. It is not free-market capitalism. Stroessner chose his buddies as the only people allowed to run companies in Paraguay. Corporatism is a close alliance between a small group of large companies and the government in which they form a “partnership” that in the end allows a small group to prosper (those with govt connections).

Libertarians believe in as little government interference as possible. This is more like Chile today, although Chile is very far from a libertarian government. The most libertarian government in the world today is probably Hong Kong, where the government lets business thrive. But even there the government is growing. The United States has been far from a libertarian society basically since the early 1900s, unfortunately.

Liberals (as defined in the United States) believe government can bring prosperity, progress and happiness. They believe in a free market but believe it must be controlled so that the poor do not suffer. Libertarians believe the poor fare best in a society where government gets out of the way.

JrL, please read the article I linked way up in #4. I think that addresses your concerns.

To sum up: libertarians may favor government intervention if there is a true monopoly. So, the issue is, is there a monopoly where there is only one choice to get internet access? The answer is no. I have nine ways of getting broadband at my house in rural Colorado. Most people have at least that many and probably many more, especially if they live in a city. There is no monopoly, therefore no need for government intervention. Let the marketplace work things out.

What nobody has answered yet is: how exactly can Comcast slow down or block access to any service given the technology in use is IP and the nature of IP networks with multiple routing technologies? (hint: the answer is, it can’t).

For me, a conservative libertarian, I still think there is a role for government. However, it should be a careful one that we use. The Constitution gives the fed the responsibility of international trade/treaties and interstate commerce.

For Interstate commerce, the Fed should ensure that it remains open and free. For international commerce, it should work for the benefit of US security and national interests.

As for busting monopolies: I look at the history, and it seems that every time a monopoly was truly broken up, it opened the door to innovation and the creation of bigger companies afterward. Most oil companies are bigger than Standard Oil was as a monopoly. Had AT&T been allowed to maintain its monopoly, we would still be renting our dial phones from them, with no advancements in fiber optics, satellites, cell phones, or internet, as we have them today.

That IBM avoided being broken up by building PCs with Microsoft’s DOS, allowed for an entire industry to spring up. Had the Fed allowed Microsoft to be broken up over a decade ago when it was using illegal muscle to destroy its competition, chances are the pieces and competition would be more impressive than what we have now. As it is, by diminishing Microsoft even a little a decade ago allowed Facebook, Google and Apple to develop new worlds for us that we may not have had with Microsoft still playing the big bully.

So, I’m a big convert to a fed that busts illegal trusts. I’d like to see us do it to the global banks that are holding so tightly onto the money we gave them! And perhaps it would be good to put an anti-trust eye over the teacher’s unions and the SEIU….

The big problem is that the Democratic Party — outside of fringe members like Dennis Kucinich — isn’t interested in ending corporate welfare or America’s aggressive foreign policy. Obama’s been just as bad on those two subjects as George W. Bush was: The major insurance companies love it that his health care bill requires everyone to buy insurance, and he’s still got 50,000 troops in Iraq and 30,000 more in Afghanistan than Bush did.

So please don’t tell me that the Democrats are falling all over themselves to end corporate welfare and foreign wars — if only the libertarians would join them! — because it just ain’t true.

I think if the libertarians worked harder to influence the Democratic party toward pushing policy that would end corporate welfare that would both enhance freedom and equality, you would see more progress in that direction.

As it stands, you have the libertarians and the Republican establishment joined in lock step to oppose everything Democrats try to do. This makes their job harder. And as a result they tend to ignore criticisms from the left from people like Kucinich because its politically easier for them to do that. As a result, ironically, Democrats look more like Republicans than Republicans care to admit.

Health Care reform is a huge example of this. Obama knew that he couldn’t get anything passed unless he got the Pharma and insurance company lobbyists on his side. These same big companies worked hard to tank Clinton’s efforts to reform health care.

But how do you get true health care reform passed that may hurt big insurance companies, hospitals (that enjoy an anti-competitive cartel over the industry that no one wants to talk about), and the like? Rather than obstinately oppose everything Democrats try to do, why not influence it so that it is freedom enhancing?

Instead of repealing Obamacare, why not modify it so that consumers have more choice – say with high deductible options within the exchange combined with Health Savings Accounts.

Maybe I’m asking too much of libertarians to join forces with Democrats. But when they consistently vote and side with Republicans on most issues. And when they vote Republican most of the time, this opposition to corporate welfare seems more like token opposition to me.

The reason why libertarians vote Republican more often than they vote Democrat is because there are many issues other than corporate welfare, and the Democrats are usually on the wrong side of them — especially when it comes to size of government, restraint on taxing and spending, and government vs. private solutions. Gun control, school choice, etc.: The Republicans are on speaking the right side on these issues, even if they don’t consistently vote that way.

Democrats are more likely to be right on civil liberties, corporate welfare, and humble foreign policy — but, like the Republicans, they don’t vote they way they talk. And if libertarians get in bed with Democrats on the issue of corporate welfare, there’s the whole “massive government solves all problems” paradigm that we can’t go along with.

I sell internet access for a living, so I probably know more about this than your average person, but let me count what I have available at my house.

DSL (Qwest, yuck!) — more or less 4-5 megs download speed.
Skybeam — microwave — I have this. Consistent 8 megs download. Works great. I have a microwave dish on my house that is pointed at a microwave tower a few miles away.
Open Range — Wimax — I have this. Consistent 2-3 megs download speed. Backup to Skybeam. Works OK. This uses the 4g spectrum.
AT&T 3g — wireless — I have this. Consistent 1 meg or so. This is my backup of last resort and if the power goes out. I also use it when I travel. (My company pays for internet access in case you were wondering).
Sprint, Verizon and T-Mobile also offer 4g-like services. In the case of Sprint and Verizon, you can consistently get 2-3 megs download speed, T-Mobile is slower.
Dish network — satellite — 2 megs download speed.
Hughesnet, Earthlink and Wild Blue offer satellite at my house for 1 meg.

Actually, I have 11 alternatives rather than 9.

All of these plans are in the neighborhood of $50/month for internet access. I pay $44.95 for the best one, which is Skybeam.

Now, you may say to yourself that Comcast is faster than some of these options, and you would be correct. With a medium plan with Comcast you can get 4-5 megs, which is certainly better than satellite and some of the 4g options.

But there is a difference between what Comcast says they offer and the truth of how fast you can download and upload.

If you want to use the internet for looking at the web, getting e-mail and downloading the occasional youtube, song, even a movie, all of the above options will work. If you want to download HD movies, watch Netflix, etc, some of them will be a bit clunky. But Comcast can also be clunky.

Your only solution (medium term) for super, super-fast internet connection is a private T45 (very expensive) or FIOS of U-verse. Fiber deployment is growing but is still limited. I know people who are getting 100 megs-plus via FIOS, which is super, super-cool, but frankly I am perfectly fine with 8 megs via my microwave link. I watch Hulu, Netflix, etc without a hickup.

The point of all this is that there is NOT a monopoly on broadband access in the U.S. If Comcast is stupid enough to try to block access to competitive networks, people will abandon Comcast and they will have serious financial problems. In addition, there are technical issues with trying to do this (as I explain above).

Sure, but I guess I would suggest this is pragmatically the wrong approach. Its like when Bush convinced a bunch of the Christian right to vote for him because of gay marriage and abortion, but then spends the next 8 years passing “No Child Left Behind”, “Medicare Part D”, invades two countries, rolls back regulation on the financial sector, and cuts taxes primarily for the rich – basically expanding our deficits and setting the stage for a massive housing bubble and collapse.

So, why vote for Bush just because he’s pro-life and against gay marriage? When nothing he’s done helps in either of these two areas?

I would argue that on of the most essential issue of the day is corporatism so prevalent in Washington DC especially in regards to the big banks on Wall Street. They are now bigger than they were before the crash and are even more essentially “too big to fail”.

So, why get hung up on gun rights or school choice, when the Democratic position is not that far off from the Republicans?

If you really believe the libertarian solution to corporatism is to align itself almost completely with the Republican party (which is basically what they have done), than I would love to see libertarians push the Republican party to go against the interest of big business, and I’m positive the Democrats would follow.

that we are on the verge of fiscal catastrophe because cannot afford the government we’re paying for today, let alone the one we’re promising for tomorrow. And the president, though he is much more serious on this issue than a huge swath of his political party, is nonetheless not remotely serious about this issue. Vowing to cut $400 billion over 10 years (a plan that, judging by the two people clapping when he proposed it, will likely be cut to ribbons if it survives through Congress), at a moment when the deficit for this year is more than three times that, indicates that Democrats (and a helluva lot of Republicans as well) are hunkering down in our awful status quo–half-heartedly tinkering around the edges of spending, making incremental changes this way and that, then launching new moonshots and redoubling old impotent efforts. Politicians have put us on the precipice of financial ruin, and they show no indication of doing a damned thing about it.

Corporatism is certainly part of that problem, but it’s far from the biggest part. The biggest part is Social Security and Medicare, which are simply unsustainable without massive tax increases or deep cuts.

I think Mike is exactly right. Our biggest threat is the failure of both parties to deal with the deficit in a mature way. We are one bond market crisis away from a complete collapse of our financial system. I hope it doesn’t happen, but it looks increasingly likely at this point.

The entire federal budget was $1.5 trillion in 1995, only 16 years ago. This year, the deficit will be that much.

The 2001 budget, Bill Clinton’s last, was $1.9 trillion. Only 10 years later, the 2011 budget submitted by Barack Obama will be $3.8 trillion, a 100% increase.

Statists decry cuts to Social Security and Medicare as “heartless.” But which is more heartless: Raising the eligibility age and slightly reducing benefits now, or bankrupting the country and not giving any benefits to anyone 30 years from now? At some point we’re going to have to make hard choices, and they only get harder from here.

“I think Mike is exactly right. Our biggest threat is the failure of both parties to deal with the deficit in a mature way.”

It’s not only the politicians that can’t be mature about it though, most of their constituents will scream bloody murder if some of those huge sacred cows are touched. Getting elected again won’t be fun if you’re labeled as the politician that destroyed social security or medicare, and getting that label is pretty easy if most voters aren’t doing much more research than whatever sound bite they hear on a radio commercial.

Scott T: Certainly, conservative ideology is much more pernicious, pervasive, and powerful in our central government that should be much more offensive to libertarian sensibilities than unions.

What kind of “conservatives” are you talking about? Any conservative in favor of corporate welfare (e.g. ethanol or agricultural subsidies) isn’t much of a conservative. Not in that respect anyway.

Real conservatives and economic libertarians have more in common on policy matters than virtually any pair of political groups you can name. In fact the more “conservative” you are in the contemporary American political spectrum, the more likely you are to share economic positions with libertarians.

Is Mike Lee a “conservative” or a “libertarian”? What about Rand Paul? Or Jim DeMint? On economic matters it is difficult to tell.

Where conservatives and doctrinaire libertarians tend to part company is on foreign affairs and social issues. Since World War II, conservatives tend to be much more interventionist, where libertarians tend to be the opposite. On social issues, libertarians tend to be much more in favor of drug legalization, free immigration, legalized gambling, etc. than conservatives are.

Other than immigration and a handful of social issues it is hard to see how progressives and libertarians could be further apart on the political spectrum. In a nutshell progressives are big government folks and libertarians are small government folks. In politics, it is difficult to have a bigger disagreement than that.

Background: I majored in Economics back in the ’60’s, even got a degree, but took it all with a grain of salt. I did come away with a few opinions which I have continued to hold for the last almost-fifty years.

Comment #1: Politicians of any stripe generally like fewer and larger corporations better than more and smaller. This is because politics is about power and control, and it is easier to control the few than the many. I don’t see how this can change.

Comment #2: Current law requires that a firm be found guilty of “monopolistic practices’ before government intervention is possible. It would be more efficient if companies which dominate their markets could be broken up into smaller, competing entities based on nothing more than their established market share.

Comment #3: Less regulation, more criminal prosecution. Regulation often creates artificial “barriers to entry”, and encourages graft. Criminal prosecution, now rare, is a death blow to most companies, whether they are ultimately found guilty or not. If it were more common, the effect on investors perceptions would be attenuated. However, it would require a change in the law: if the applicable government regulation says you can only defraud 40% of your customers, and kill less than 10%, then as long as you keep within those limits, no one can be prosecuted for fraud or manslaughter.

First of all, I want to say this is a fantastic discussion and its one that we really need to be having throughout our country. Out deficits are unsustainable and in the long run will be catastrophic for our country. But how do we solve it? And how does this tie into corporate welfare? Here are a few posts to consider:

First of all, I think one of the biggest problems with our government and its size is corporate welfare and while conservatives say they are against it in practice, conservatives as found in the Republican party (those are the conservatives I’m talking about), have been pretty consistently for corporatism – and have justified it with "trickle down economic" theories, or "starve the beast" where they modify the tax code to unjustly favor the rich and powerful with the idea that those people can more effectively lead our economy to the benefit of the whole. Maybe they won’t explicitly say they believe this, but that’s how it plays out.

"But what really bust the US budget and pushed up our debt-to-GDP ratio was the way the financial system amplified the housing-based boom and bust through 2008; there were some ‘feel good’ effects through the end of 2007, but then we faced the worst recession since World War II. Net government debt held by the private sector will increase from about 42 percent of GDP to around 80 percent as a direct result of the economic crisis – and the measures taken to prevent it from turning into another Great Depression."

and

"If you want to fix the US budget – keeping the deficit under control and bringing down the size of our government’s debt – you have to address the risk-seeking behavior of big banks. No fiscal strategy can be credible without addressing the major problem that brought us to this point."

Here’s why balancing the budget with severe cuts on social security and medicare is a really bad idea:

"Our country faces the very real threat of a retirement security crisis, since saving via 401(k) plans is shockingly low; in 2007, the average retirement account balance for a household where the head of household was between ages 55 and 64 was only $63,000 (Federal Reserve Survey of Consumer Finances, Table 6). That figure is surely lower today, after the financial crisis. And your administration knows very well the problem of health care cost inflation, having done more to attempt to solve this problem than any other administration, ever."

So, how in the world can anyone feel good about blithely cutting social security any time soon given the fact that sooo many people will be retiring no where near ready to sustain themselves without social security.

Finally, I think the core problem is our tax code. It is incredibly inefficient.

but makes some interesting points about why a lot of Republican ideology has led to such a complex and an inefficient tax code:

"Subsequently, the idea took hold among conservatives that taxes should be raised in the most painful, inefficient manner possible so as to make it as difficult as possible to provide revenue for the government. This philosophy complimented another idea that had taken hold among conservatives in the late 1970s that tax cuts automatically led to spending cuts through a mechanism known as starving-the-beast. Therefore, a poorly designed tax system and tax cuts whose sole purpose was to increase the deficit became the twin pillars of Republicans’ tax policy. This was because, somehow or other, it would hold down the size of government, which they viewed as the one and only determinant of growth.

The conservative position on taxes is both wrongheaded and myopic in the extreme. It’s wrongheaded because it ignores the fact that a poorly designed tax system imposes a heavy deadweight cost on the economy over and above the revenue raised. A 2005 survey of research on this subject by the U.S. Government Accountability Office found that the cost could be as high as 5 percent of Gross Domestic Product. It’s myopic because most economists think that technological innovation plays a much bigger role in growth than the size of government. And it goes without saying that there is not one iota of evidence that starve-the-beast theory works; all it accomplishes is to increase the budget deficit, a fact just reconfirmed by a new International Monetary Fund study.

So, here’s why I’m so worried.

We do have very major problems with our deficits. But I would argue that corporatism is the great evil in our society today. And we really need to resist efforts to pin blame on the poor or the elderly and especially we need to resist the urge to force the poor and the elderly to shoulder the brunt of our efforts to balance the budget.

I think we need to focus our efforts on reforming and simplifying our tax code (which powerful corporations and special interests will fight this tooth and nail with continued support from Republicans and many Democrats), and to reign in the biggest Wall Street banks who have done more to damage our economy than any other group.

The conversation seems to be winding down, but I wanted to point out John Stossel’s response to the State of the Union address, wherein he calls for eliminating corporate welfare, thus:

Trade should be free. Free trade creates prosperity. And since trade should be free, we should eliminate all corporate welfare and all subsidies. That means: agriculture subsidies, green energy subsidies, ethanol subsidies, and subsidies for public broadcasting.

Scott, your comment is too big for me to address all points, but I would like to point out that we can “fix” Social Security through two simple steps: 1)lower benefits for the wealthy elderly who have large incomes (say, more than $300k per year) and 2)increase the retirement age by one month a year over 36 years. So, today you get full benefits when you retire at 67. Next year it would be 67 and one month. Year after, 67 and two months, etc. So, the claims that conservatives and/or libertarians want to “blithely cut Social Security” (your words) are simply demagoguing the issue. You can recognize Social Security is an issue and come up with common-sense solutions. Unfortunately, most on the left (and some Republicans) prefer to make it a political issue, which just guarantees that we kick the can down the road and avoid solving it.

I agree with your first point more, the second point is trickier because it hurts the working poor more.

If you’ve spent your career doing harder, more manual, more physical labor, extending the age that you can get your benefits for these people (many of whom of whom have shorter life-spans – I’ll have to dig to back this claim up but I believe I’ve read this) is a real slap in the face.

I’m not an expert on social security reform, but certainly we can look at increasing the amounts paid into it as well as cutting benefits over the long term.

Just to sum up my primary points in this discussion:

1) Most of the Republican/Libertarian policies that have found their way into legislation have targeted the poor. I’m not saying they were necessarily bad policies, I am saying that over the past few decades the rich have continued to enjoy policies that have benefited them while many of those targeted to help poor people have been rolled back or are now prime targets to be rolled back going forward. This has helped to aggravate the large inequalities we have right now.

2) Corporate welfare is, in my mind, by far the most important issue facing our country to day and has caused a lot of our current economic problems – an inefficient tax code that has cost our governments enormous amounts of revenue, and an out of control financial sector who benefits from risky bets but gets bailed out by tax payers when they fail.

Reforming Wall Street and reforming the tax code should be the primary focus of our politics in the upcoming years.

I’m not sure which political party is in a better position to take leadership in these areas, but I am sure we’re going to need cooperation from all sides to get it done because the solutions are going to be very politically difficult because the beneficiaries currently have large political influence and deep pockets to influence the way these arguments get presented.

I did suggest, that perhaps more libertarians need to get behind Democrats because attacking these issues in many ways align with Democratic and liberal objectives toward greater equality. But this is a point I’m willing to concede. I’m willing to support either party willing to fix these nasty problems currently facing our country.

I did suggest, that perhaps more libertarians need to get behind Democrats because attacking these issues in many ways align with Democratic and liberal objectives toward greater equality.

And there in lies the enormous chasm between liberals and libertarians: Libertarians are not even remotely interested in “greater equality,” only in great liberty. Greater liberty will naturally produce inequality because some people will make better choices and some people will have unfair personal advantages.

When the Declaration of Independence proclaims that “all men are created equal,” it meant in standing before the law, in freedoms and liberties. It did not mean that everyone is guaranteed housing, medical care, and retirement money.

Maybe you’re right, but then I would argue that the libertarian view from that perspective is pretty flawed and not one I can personally endorse.

But I find it surprisingly that you see no room for common ground. This post was about finding common ground. I was trying to make the point that the problem with corporatism is so big that it should dominate every other issue.

Scott, let’s fine common ground on cutting military spending and lobbying our reps to get U.S. troops back home. Let’s concentrate on real threats to this country. Let’s find common ground on end ag subsidies and all corporate welfare, including to the oil companies. I think there’s a lot that can be done there.

Murray, exactly right. There is very little actual capital in modern-day capitalism. We print money and buy stuff and “invest” with fake currency creating one bubble after another. This is not capitalism.